Q3 2025 Market Summary

The easing of trade tensions, namely an agreement between the US and China to pause tariffs, helped improve investor confidence, which gave a boost to global markets. However, long-term uncertainty remains over the relationship, and many companies are looking to reduce their dependence on the two superpowers.

Asian markets saw strong growth, especially in technology companies, amid the current AI boom. Japan’s stock market rose by 11%, helped by a rise in exports and strong domestic economic data.

In the US, markets experienced some volatility but ended the period higher overall.

In the UK, the two key benchmarks in the stock market performed well. The FTSE All-Share gained 6.9% and the FTSE 100 saw its best quarterly performance since the end of 2022.

European markets rose modestly, though performance varied between countries, with French markets posting gains and German markets recording losses.

Economic growth has been frequent feature in the headlines this year, as sluggish performance across several major economies continues to raise concerns.

However, global economic growth is expected to be higher than previously predicted. The International Monetary Fund (IMF) has raised its forecast for 2025 to 3.2%, up from its July prediction of 3%, though a lot of this is driven by developing economies.

The UK is set to be the second-fastest-growing economy in the G7 in 2025, with an estimated growth of 1.3%. Germany, Italy, and France, on the other hand, have been slower to grow but are all expected to improve their performance in 2026.

Other key economic indicators have also presented a mixed bag in Q3. Inflation has remained above target levels in many key regions, though notably not China, which continues to experience deflation.

Central banks typically attempt to tackle inflation by adjusting interest rates. However, despite a rise in inflation, the US reduced its key interest rate in September for the first time since the end of 2024 to help boost the job market.

Across the pond, the Bank of England cut the base interest rate to 4% in August, but held it steady in its September meeting amid high inflation. Meanwhile, the European Central Bank cut interest rates to 2.15% in June and has maintained them there since, as inflation has crept up again.

When markets are doing well, it’s natural to wonder if you should be investing more in equities to make the most of the momentum. But chasing short-term gains can sometimes mean taking on more risk than is right for you.

That’s where your risk profile comes in. It’s designed to strike the right balance – giving you the chance to grow your money while helping you stay comfortable through the ups and downs.

Equities are great for long-term growth, but they can be unpredictable in the short term. A strong quarter – like the one we’ve just seen – isn’t a signal to change course. The best approach is usually to stay invested in a well-diversified portfolio that reflects your goals and tolerance for risk.

If you’re considering a review of your investments, it’s worth checking in with your financial planner to make sure that any short-term changes will still align with your long-term plans.

As we head towards the end of the year, there’s a few key themes to keep an eye on:

While the political landscape remains uncertain, Q3’s market performance is a good reminder that even in uncertain times, markets can still find ways to deliver.

The strong performance of Asian and emerging markets in Q3 alongside the relative underperformance of European equities, reinforces the value of diversification.

Moreover, the positive performance of global markets overall amid high inflation highlights the value of investments over cash. Keeping money in cash can mean it loses its purchasing power over time, while investments have a better chance of keeping up with rising prices.

All of which is to say, it’s important to focus on the fundamentals of investing, regardless of the external noise. And as always, we’re here to ensure your financial plan stays aligned with your risk profile and long-term goals, not simply reacting to the latest headlines.